Scandic Hotels Group began the hotel earnings season with a financial update on Friday, voicing optimism about travel demand despite recent inflationary pressures.
“We expect a strong third quarter with high demand and increasing prices,” said president and CEO Jens Mathiesen on an investor call.
Scandic runs 55,930 hotels in Scandinavia and other European countries under the Scandic, Hilton, Holiday Inn, and Crowne Plaza brands — mostly under long-term leases. Friday was the 60th anniversary of the Stockholm-based company, one of Sweden’s most well-known brands.
“We expect a strong third quarter, driven by continued high levels of leisure travel during the summer as well as business travel and meeting gaining momentum in the latter part of the quarter,” Mathiesen said. “So based on the current booking situation, we expect occupancy to be on par with the same period last year, but also continuing at higher average prices per room.”
In the second quarter, the company enjoyed record high revenue per available room, or RevPAR — a key industry metric.
In the second quarter, Scandic generated a profit of about $26 million (271 million Swedish krona) on net sales of about $556 million (5.69 million Swedish krona).
The hotel group has one of the lowest levels of indebtedness of any publicly held competitor. As of the end of June, it had net debt of 2.8 billion Swedish krona, which was only 1.1 times its adjusted earnings before interest, taxes, depreciation, and amortization on a rolling one year basis.
The company recently entered the economy segment with Scandic Go, a brand with 221 compact hotel rooms. The brand’s design aims to drive more room revenue per square meter at a lower capital expenditure and labor cost on average than its other brands. The new brand’s first property will open next summer.